What Determines the Cost of Health Insurance?

Have you ever wondered what determines the cost of your insurance? If you’re under 65, the cost of health insurance can vary based on a number of factors.

Thanks to the Affordable Care Act (ACA), insurance companies can no longer use factors like your gender or medical history to determine your premiums or access to health coverage.

Nowadays, insurers can only consider certain factors when determining health insurance premiums. Here’s what they look at:

1. Age

The older you are, the higher your premiums are likely to be, until you reach age 65. That’s because as you get older, the chance of developing a chronic health condition increases, and older adults tend to use health care services more than younger adults.

2. Where You Live

The cost of living varies from state to state and city to city, and the level of competition among insurance companies can also impact premiums. Plus, state and local rules can play a role in your rates.

3. Family Size

The number of people covered by your health plan is also important. A single person can get coverage for less than a family, but in most cases, a family plan makes more sense financially.

4. Tobacco Usage

If you smoke, use tobacco, or have used it in the past year, insurers are allowed to charge you more under the ACA. This tobacco surcharge can be up to 50% of your premium, so it’s a good financial incentive to quit smoking.

5. Plan Ratings

Finally, health insurance plans are rated by the amount of coverage they provide and the out-of-pocket expenses required. The less you pay out of pocket, the higher the premiums.

There are four categories of health plans under the ACA: Bronze, Silver, Gold, and Platinum. Each has different levels of coverage and out-of-pocket expenses, so choose one that fits your needs.


Hopefully, today’s article gives you a better understanding of how health plans work. Remember, if you ever need help with your health insurance, we are here for you. Thanks for reading!

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